Lesotho, the small southern African nation, was granted a revised US tariff rate of 15% on July 31, following months of uncertainty over steep trade penalties proposed by the Donald Trump administration.
The modified rate came through an executive order signed by President Trump. Lesotho had been facing the threat of a 50% tariff, one of the highest proposed for any US trading partner, since April.
The revised rate offers partial relief and the damage to Lesotho's economy has already begun to unfold. As highlighted in a Wall Street Journal report, the country is grappling with shrinking exports, factory closures and suspended infrastructure projects.
The Trump administration defended its decision to impose a 15% tariff on Lesotho by calling it a reciprocal measure, claiming the nation levies 99% tariffs on US goods. Officials in Lesotho have contested the figure, saying they are not sure how the White House arrived at that number.
Lesotho's economy, heavily reliant on garment exports to the US under a 25-year-old trade deal, has been particularly vulnerable. “We took advantage of the trade concessions, being a small country,” Lesotho's Trade Minister Mokhethi Shelile told WSJ. “I did not expect that to be a reason to be punished.”
Garment production is the largest source of private-sector jobs in the country, where the GDP stands at just $2.3 billion. Brands like Levi's and Reebok have sourced clothing from Lesotho for years, but with orders drying up, factories are laying off workers en masse.
Lesotho's government declared a state of disaster in July, allowing emergency measures to redirect funds towards youth employment and small business support.
At Ever Successful Textile in the capital Maseru, once a factory of 650 workers, only 90 remained by late July. Among those laid off is 44-year-old Lieketseng Billy, a single mother, WSJ reported.
“We don't have food. Next week, my daughter is going back to school and we need to pay school fees for the third quarter. I don't know where the money is going to come from,” said Billy, who is HIV-positive. She is also dealing with cuts to US-funded health programmes. Her antiretroviral supply has been halved.
In rural areas, education has been hit hard. Construction of US-funded school buildings has stalled mid-way.
